Yesterday was a particularly quiet day for markets in contrast to the previous 10 days as traders decided to take a breather ahead of New Fed ChaIr Janet Yellen’s testimony this afternoon. European markets closed mixed. The US Dollar ended the day lower.Gold higher and Oil prices mixed after their big run up last week.
All eyes will be on the US this afternoon as the focus turns to Janet Yellen as she gives her inaugural testimony to the House Economics Committee. Most analysts expect her to be a touch on the dovish side but to continue the theme of steady tapering. This event has been remarkably market moving in the past as the Fed has used this forum, in particular, to adjust market expectations if it feels it necessary. As such I would expect markets to be somewhat range bound ahead of it. Note this Testimony is repeated tomorrow but the Q&A differs.
This morning on the economic front we have UK BRC Sales whilst for the second day in a row we have no data of note from the Euro-Zone. At 1.30 pm we have the latest NFIB Small Business Optimism from the US to be followed by Yellen’s Testimony at 3pm.
March S&P 500
After last weeks’s drubbing for the US stock market the S&P has now closed up three days in a row, on contracting volume, ahead of Yellen’s very important Testimony this afternoon which will include the Fed’s semi-annual report on Monetary Policy and the Economy. After I posted yesterday morning the S&P was trading at my 1788 buy level before having a nice rally after Wall Street opened and I was able to cover this position at 1794 and I am now flat. I am going to stay flat ahead of Yellen and if the market trades higher after the event I will be a small seller from 1812/1820 with a 1824 stop. Note that we still have an open Gap from two weeks ago from 1816/1823. I will also look to buy the market on any dip to 1786/1790 with a 1783 stop. If I am taken long and subsequently stopped out I will be a more aggressive buyer in front of 1775 with a 1768 stop.
Euro/USD
No change as I do not want to chase the Euro higher from here and I will leave my buy level the same at 1.3590/1.3620 with a 1.3575 stop. I still do not want to be short the Euro at this time.
US Dollar Index
Also no change as I am still long in small size at 80.70 with the same 80.30 stop.
March DAX
The Dax just missed my 9250 buy level before trading a lot higher this morning and I am still flat. I still do not want to be short the Dax at this time and today I will move my buy level higher to 9305/9330 with a 9275 stop.
March FTSE
The FTSE traded down to a low of 6511 yesterday, after I posted, just missing my 6510 buy level by one point which is very frustrating and I am still flat. Today I will move my buy level higher to 6520/6540 with a 6495 stop. I will also be a seller on any further rally to 6630/6670 with a 6685 stop.
Dow Rolling Contract
Just like the FTSE, the Dow just missed my buy level before trading higher and I am still flat. The Dow has now rallied 500 of the 1220 points that it lost this year and as I mentioned yesterday I will be a more macro seller on any rally to 16000/16200 with a 16250 stop. Given the extent of the rally over the last three days I do not want to be long the Dow at this time.
March BUND
The Bund has traded down to my 143.50 buy level this morning. I am going to lower my stop to 143.20 and if I am stopped out I will be a more aggressive buyer on any dip to 142.80/143.00 with a 142.60 stop.
Gold Rolling Contract
Gold has finally broken the key 1275/1280 resistance level this morning and it will be very interesting to see if we can close over this level later today as a closing break could signal a move to 1330/1350. I am not going to chase the market here as I want to see where Gold closes but I will move my buy level higher to 1269/1275 with a 1263 stop.
Silver Rolling Contract
No change as I am still long from yesterday morning at 20.10 with the same 19.70 stop.
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